Jack Ellis

The European Patent Office (EPO) yesterday released findings from an investigation into the potential effect of patent thickets on market entry. The study suggests that improvements in patent quality, better dissemination of information and greater market transparency could remove much of the complexity associated with patent thickets. But are they really that much of a problem?

It has been argued that patent thickets – perceived over-accumulations of patents covering similar or complementary technologies – cause a barrier to market entry, particularly for smaller, early-stage businesses, as they increase the risk of infringing incumbent IP and lead to increased licensing costs. But yesterday’s report - which was put together by the EPO’s Economic & Scientific Advisory Board (ESAB) and, among other things, is the product of workshops held last year involving numerous IP thought-leaders from industry, academia and government – concludes that they are not a distinct problem in and of themselves. Instead, the ESAB finds that patent thickets “appear to be closely related to innovation management and its complexity”. As a result, it suggests that solutions to reduce patent thickets should aim at eliminating unnecessary complexity. The report makes several proposals for achieving this, including greater information sharing between patent-issuing authorities around the world in a drive to improve the quality of granted patents. It also calls for increased transparency with regards to patent ownership – something that is being discussed on the other side of the Atlantic, too – in order to improve the ability of new market entrants to navigate areas of high patenting activity.

Over at the IP finance blog, Keith Mallinson of market analysis firm WiseHarbor has argued that comparatively low levels of patenting among SMEs results from factors other than the supposed anti-competitive effect of patent thickets. Rather, he thinks that the concentration of IP development in certain areas presents SMEs with opportunities to license existing technologies and participate in industry standards, thereby potentially accelerating their time to market and improving their competitive edge. Mallinson writes:

SEP [standards-essential patent] disclosures and the openness for participation in SSOs [standards-setting organisations] by all comers provide excellent technical and commercial opportunities for SME market entry. Numerous SMEs are flourishing as software and hardware developers who build on, if not contribute to, standardized ICT technology protocols and platforms including those used extensively in mobile devices such as 2G GSM, 3G HSPA, 4G LTE, WiFi, Bluetooth, Near Field Communication (NFC) and H.264/MPEG-4 AVC (video and audio). [A 2012 UKIPO-commissioned report] finding “overwhelming evidence in the literature that patent thickets arise in specific technology areas” is nothing more than the unremarkable confirmation that some fields, such as the above, are rich with many complex and interrelated technologies including associated patents. This alone does not mean there are any difficulties.

To follow on from Mallinson’s last point, the fact is that intensive patenting obviously tends to occur in areas of technology that have significant market potential. Those technologies are therefore likely to have the most R&D dollars (or euros) spent on them – and to ensure a return on that investment, it is little surprise that companies that have the wherewithal to do so will try to obtain as many patents as they can in order to secure their stake in the space and best ensure the chances of future revenue streams. The EPO report recognises this, too. Much like the emotive issue of NPEs, patent thickets need not be thought of in terms of ‘good’ and ‘bad’ – while they can be problematic, they can also be advantageous. They are simply features of an increasingly mature marketplace that is presenting increasingly rich opportunities for its participants.